Not quite the opening lyric to the Simon & Garfunkel tune, but an appropriate rewrite given the subject of this article.
We’re all saving, the economic egg heads still haven’t figured out why, but they keep expecting us to fling open our wallets again at any moment.
Not good news for retailers, but our supposedly spendthrift ways don’t look like returning.
While internet shopping has become a good scapegoat for the pressures facing retailers, it’s worth taking a historical look at the savings rates of Australians.
Over the past 60 years Australians have predominantly been savers
In the 1960’s our savings rate consistently stayed above 10%.
In the 1970’s the savings rate consistently pushed above 15%.
By the mid 1980’s it had fallen below 10% and by the late 1990’s it had started falling under 5% per quarter, but we were still saving.
Unfortunately, somewhere in mid 2002 our savings rates went negative.
Maybe an assumption we were doing so well we didn’t have to save anymore, along with the Commonwealth Bank’s ‘equity mate’ idea we could use our homes as ATM’s.
The negative savings rates didn’t last long, with the scare of the global financial crisis starting to push them back towards 5% again.
And by 2009 they were back hovering around 10%, more in line with where they’d been for the majority of the last 60 years.
Which goes to show how short our memories can be when it comes to financial matters, it was only a 10 year period beginning in the late 90’s when we really began to let our savings habit slip.
Yet there’s still much expectation that we will go back to that brief period.
It might be quite tough for some sections of the economy to hear, but it appears the general public has reverted back to paying themselves first with discretionary spending coming a distant second.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you want help with your financial future, we’re arguably the best financial advisor in Australia.
